Transferor Profit/loss recognised in income statement based on difference between consideration received and carrying value of net assets transferred.

Transferee Is it a business combination?

Yes

Part VII transfer

No

Profit/loss recognised in income statement based on difference between consideration paid and net assets acquired. This profit/loss will not always equal the transferor’s profit/loss due to differences in valuation methods between the companies.

Is the transfer to a third party or intra group?

3rd party

Intragroup

2 options

Purchase method FV of consideration > FV of net assets acquired, net debit is goodwill (B/S). FV of consideration < FV of net assets acquired, net credit is negative goodwill (B/S).

Purchase method FV of consideration > FV of net assets acquired, net debit is goodwill (B/S). FV of consideration < FV of net assets acquired, net credit is negative goodwill (B/S).

Merger accounting method Difference between consideration paid (generally its FV) and net assets acquired recognised in equity. Net assets measured at book value per transferor accounts, adjusted to achieve uniformity of accounting policies.

'Net assets acquired' includes any Present Value of In–Force (PVIF). Goodwill is over and above any PVIF recognised by the transferee.